Mon, Jan 24, 2005 - Page 11 News List

Software giant Zennstromon pioneering peer-to-peer

At the age of 39, Niklas Zennstrom has made a name for himself throughout the world by co-founding two peer-to-peer-based software programs, Kazaa and Skype, two years ago, which trembled the global music and telecommunication industries. In his latest visit to Taiwan, he talked with `Taipei Times' staff reporter Jessie Ho about how he is trying to revolutionize the traditional telecom industry through what he called a disruptive technology.

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Niklas Zennstrom gestures during the interview.

PHOTO: CHIANG YING-YING, TAIPEI TIMES

Taipei Times: How did you originate the idea of applying peer-to-peer (P2P) technology to the telecom industry?

Zennstrom: When we look at the evolution of the Internet, every online communication was P2P when it first appeared. When the Internet became more popular in the 1990s, companies invested a lot of money to expand their Web servers and network capacity. But to establish a very powerful communication network, it's much more logical to distribute peer-to-peer. The more people use it, the more resources they have without having to invest in servers and other infrastructure. As this form of communication can be done without going through a server, users can communicate with each other even when the server dies.

TT: Now that Skype has attracted a huge number of users, what is your next step?

Zennstrom: What we are doing now is developing new paid services for Skype. Voicemail, with which users can leave voice messages for other users when the receiver did not answer the call or it's disconnected, are examples. We are also working to allow customers to use Skype from wherever they are and not have to be tied to the computers. Last year we worked with Siemens AG, which produced cordless phones for Skype. We also seek to make Skype compatible on mobile devices including smart phones and pocket PCs of various platforms. Now we are in the process of testing and evaluating some of the different platforms, such as Windows and Linux, and hope to come out with Skype mobile devices that can be used with WiFi networks. Another value-added service that is activated on a successfully market-to-market base is "SkypeIn." People can make calls from a normal telephone to a computer by dialing telephone numbers. But whether we can introduce this service depends on local market conditions. Phone numbers are hard to obtain in some markets. In Taiwan, there are still a lot of issues that haven't been worked out. [Editor's note: Robert Lo (羅子亮), vice president of Skype Technologies SA's local partner, joined the interview and elaborated on this question.]

Lo: We've asked local fixed-line operators to sell phone numbers to us since last year. But in Taiwan, they are not allowed to wholesale the numbers to Internet phone operators. So we are expecting the Directorate General of Telecommunications to lift the ban, which it previously said should be okay by the middle of this year. Before that happens, users in Taiwan can buy overseas phone numbers acquired by Skype. Skype has purchased some numbers in the US and Canada, and by buying the numbers, friends or business partners in the country can call the Taiwan user with local rates. The service is still in testing, and once Skype officially launches it, users in Taiwan can use it, too.

TT: Has your company broken even after less than two years of operation? Do you need to raise more funds to maintain operations, especially when most of Skype subscribers merely use the free service?

Zennstrom: Our last fund-raising was in February last year. I don't have exact financial figures at this point, but we are confident now that our revenue growth is good enough for us to not to have to raise any more money. We also have a cost-efficient measure to save costs in personnel and marketing. So far, we have only 80 employees in the company, which is quite small considering we operate on a global scale. We are certain that the revenue growth is definitely going faster than the costs growth.

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